[State of the Industry 2007] Staying Ahead of Gas Prices

No matter how many accounts you service, or how effective your chemicals are, there’s one part of your business that will always nag at PCOs: the price of gas. In response to the rising prices for petrol, some companies have raised their own prices. Others, in an attempt to control costs rather than raise revenue, have opted for installing GPS tracking systems on their fleets.

PRICE-RAISING PERIL. Wendy McAndrews, general manager, Casner Exterminating, said the Castroville, Calif.-based company bought four new trucks earlier this year for their improved gas mileage, but decided, for now, against raising prices out of fear of losing business.

“The problem is, we’ve kept our prices down, because we might lose half our customers,” McAndrews said. “We’ve kind of bit the bullet just to get through.”

Casner, like many other companies, has tried to keep its prices flat and raise revenues in other areas: It has started advertising on TV, joined a local welcome wagon program, and has started contacting real estate agents and offering free limited inspections.

U.S. Pest Protection, Henderson, Tenn., had to raise its prices to offset rising fuel costs, said Andrew Douglas, president and general manager. Its five percent price increase was implemented in July, and the company saw a few customers balk and cancel their services.

“Nobody’s happy about it, but everybody realizes the consumer’s going to pay the price,” Douglas said. “We’re simply telling them the truth. There’s only 100 pennies in a dollar.”

NUMBERS GAME. Douglas said the company uses software to condense routes, and he encourages his 32 drivers to do the “common sense” stuff — obey the speed limit, don’t make hard stops and don’t leave the truck running — to improve their fuel economy.

Glenn Matthews, manager Modern Exterminating, Columbia, S.C., vehemently opposes any price increase based on gas prices.

“Absolutely not. If you raise prices on somebody, the minute (gas) prices go down, your phone’s going to be ringing.” It’s a cost of doing business, he said, and that’s how any increase in prices should be presented to customers. “If you continually adjust your bill, you’ll have more problems than you really needed.”

Instead of raising prices, Matthews said, Modern chose to lower its mileage. With the price of fuel going up, the company canceled a planned expansion of its territory. It also moved its sales staff and termite baiting technicians into Ford Focuses instead of F-150s or even Rangers, and uses a GPS system to track its technicians’ driving habits.

Those changes, Matthews said, save Modern about $1,000 each month in fuel costs.

TECHNICIAN TRACKING. One way many PCOs improve the efficiency of their technician routes — and the honesty of their employees — is through the use of such tracking software. These programs use the Global Positioning System and its satellites to pinpoint the locations of vehicles and, increasingly, technicians.

Drew Hamilton, vice president of sales for Garden Grove, Calif.-based Teletrac, said his company’s GPS system allows vehicles and technicians to be tracked in real time, giving business owners hard data to compare route efficiency. Hamilton said the system also has a navigation component, which can automatically route drivers along the most-efficient path from job to job.

He said a typical three-year contract costs $65 per month, depending on fleet size, and that PCOs can see a return on their investment in about four months.

Jonathan Durkee, vice president of sales and product management for SageQuest, Beachwood, Ohio, said his company’s system uses cell phone networks to plot a driver’s activity in real time, and give such data as a vehicle speed, if the engine is on, miles driven and time spent at each location.

“If you take a look at someone’s entire day from that perspective, you can learn a lot,” Durkee said.

The system costs about $500 to install and about $40 a month for service. Durkee said PCOs could expect to recoup their costs in three to six months, depending on whether they leased or purchased their systems.

TELLING YOUR TECHNICIANS. But no matter how efficient the system might make your company, many technicians bristle at the idea of having someone or something track their every move during the day.

“That’s the 800-pound elephant sitting in the living room that nobody wants to talk about. It’s really important to be up front with your employees,” Hamilton said. “We always advise against covert (installations). Being forthright with your employees always yields the best results.”

But ultimately, if you couch the decision in customer-service and cost-saving terms, your employees are likely to understand, Durkee said.

“A tremendous amount of investment goes into things (PCOs) just cannot see during the day,” he said. “And if you can’t see it, it’s difficult to manage it or improve it.”

OTHER WAYS TO SAVE. U.S. Pest Protection already has changed the frequency of its services from monthly to every other month for new customers, Douglas said, and in the future, it’s looking at not allowing its technicians to drive company trucks to and from home.

“We are being reactive,” he said, “but as proactive as we can so we don’t have to pass on every spike” in our prices to customers.

Donnie Blake, president of OPC, Louisville, Ky., has used tracking software to condense routes, and said he is considering having its 53-vehicle fleet managed by an outside vendor, allowing him to keep newer, more fuel-efficient trucks on the road.

“We’re constantly looking at routing to make sure we’ve efficient day in and day out,” Blake said. “We’re not passing it on to our customer. My customers are experiencing the same thing we are.”

Pedaling PCOs

An entire division at New York-based Assured Environments helps keep the company partly protected from the rising cost of fuel: They don’t drive.

Taking advantage of the hyper-urban environment of Manhattan, Assured Environments has about 70 technicians who ride the subway — and another two who ride bicycles — to move between accounts.

The technicians often spend an entire day servicing 20 accounts in one building, and use carts to carry their pesticides and tools.

President Andrew Klein said the downtown division has never used trucks, partially as a cost-saving measure and partially as a way to keep the company’s environmental impact down.

“You couldn’t service customers in New York with a vehicle,” Klein said. “If we did that, we would truly price ourselves out of the market.”